Striving to Top the Search Lists

By BOB TEDESCHI, NY Times

HEADING into the home stretch of the holiday e-tailing season, millions of consumers will once again rely on search engines to help find the items they want.

According to the Internet consultancy Jupiter Media Metrix, 59 percent of online buyers start at least some of their shopping excursions by typing a product name into a search site. For portals that double as search sites, like Yahoo, MSN and AOL, the shopping urge means huge numbers of visitors.

And for the merchants trying to put their links to the top of the search listings, it can mean huge headaches.

Jockeying for position at the top of the search results "is very important, but it's also a nightmare," said Chris McCann, president of 1-800-Flowers.com, a floral and gift retailer. "The more you get into it, the more it drags you."

The process has devolved into a cat-and- mouse game in recent years, with retailers trying to crack the search criteria of the most popular engines, so they can design their pages in ways that will catch the search engines' attention.

But those criteria constantly change, analysts say. A typical search engine scans the Web every day, taking snapshots of Internet sites and keeping that information in a massive database. When someone types a search for "flowers," the engine will scan its database and return results based on a formula - the number of times "flowers" appears on a Web page, say, or the number of pages on the site with that word in the title, or some such combination.

Technologies and businesses have emerged to help e-tailers game the system. "A lot of them will promise to get you in the top 10 of the search results, but we've always been pretty skeptical of the results they give," said Marissa Gluck, an analyst with Jupiter Media Metrix, an Internet research and consulting firm.

Cynics say the search engines have good reason to make it hard to decode their search criteria. By doing so, they create a market for themselves for so-called paid listings and paid placement that enable Web sites to increase the chances - or guarantee - that their links will appear at the top of the search results.

Ms. Gluck, of Jupiter, said she did not necessarily see a conspiracy at work, but she does see merchants and marketers rushing to paid listings in much greater numbers than in years past.

The paragon of this business model is Overture, formerly known as GoTo.com. The company, based in Pasadena, Calif., serves nearly 50,000 client advertisers, according to Ted Meisel, its chief executive. Those companies bid for placement in the search results that consumers type into the Overture.com site, as well as Yahoo, AOL, Alta Vista and others.

On Yahoo, for example, a few Overture search results appear atop those generated by the Google search engine, which delivers a broader array of Yahoo's search results. Overture pays an undisclosed amount to its partner sites or lets them share in the revenue gleaned on every click.

Overture shares nothing, of course, when consumers go directly to its site to conduct searches. ExtraTouchFlorists.com bid $3.23 last week to appear atop Overture's listings. Each time someone clicked on that listing, ExtraTouchFlorists.com, which helps consumers locate local florists, paid Overture that amount.

Transactions like these have helped Overture reach profitability in recent months, in an environment where many other advertising- dependent Internet companies are on life support. Overture, which is publicly traded, earned $9 million in the third quarter on $73 million in revenue, and Mr. Meisel said he expected better results this quarter.

Danny Sullivan, editor of SearchEngineWatch.com, a site that tracks the search engine industry, said there was a clear reason for Overture's gains. "The money that's going to them had been going to banner ads and portal partnerships and those sorts of things," he said.

After the Internet bust and the onset of the recession, companies became less willing to commit to advertising deals that could not guarantee results. But businesses that appear in the search listings of Overture or Look- Smart, a competitor, only pay the listing fee if someone clicks on the link.

"Marketers are realizing that search engines deliver a targeted audience that converts well" into buyers, Mr. Sullivan said.

According to Ms. Gluck, "Customers tend to focus on search results rather than the advertisements that surround the listings."

The retailer Brookstone, which sells unusual gifts and tools on the Web, through catalogs and 245 retail stores, is using Overture to good effect, according to Gustavo Peña, Brookstone's director of marketing communications. Mr. Peña says customers who come to the site from Overture's partners actually buy goods at a much higher rate than Brookstone expected, though he declined to be specific.

Brookstone bids on 10 search terms on Overture, including the store name, and others like Tempur-Pedic, the brand name of a mattress the company sells. Brookstone bid less than 7 cents per click last week, and fell to number 27 on the search results. The top bidder, HealthyBack.com, paid 73 cents per click.

The company benefits from its relationship with Overture in other ways, Mr. Peña said. Overture works with its clients to help determine the search terms that best lead customers to the company - "gifts for men" is better at yielding Brookstone customers than "men's gifts," for instance.

Brookstone has, in turn, given that information to a search engine consultant, which has helped improve the company's standing even with search engines that do not use the bidding system.

Ms. Gluck says such services show that search engine consultants, while they can sometimes inflate their claims, can be instrumental. Even businesses that bid for search placement can use outside help.

Mr. McCann, of 1-800-Flowers.com, said his company had succeeded fairly well so far with the search engines, despite the fact that it had not yet bid for placement. He said that earlier this year the company earlier began using an online marketing company, that has reduced the number of hours his staff must spend testing the search engines to see where 1-800-Flowers shows up, and tweaking the site's design to affect those listings.

Mr. McCann said he would like to test the bid-for-placement search engines, but had reservations. He was not more specific, other than to say he was unsure whether some of those sites infringe on his company's trademark if they allow another company to bid for the search term "1-800-Flowers."

An Overture spokesman, Jim Olson, essentially ruled out such a possibility, saying that if a company bid on a term that was a trademarked name of another company, such a bid would only be accepted if the content on the bidding company's site was relevant to the trademark holder - not as simply a gambit for siphoning off a rival's traffic.

In any event, at the current price of roughly $3 for the "flowers" search term, Mr. McCann said he would probably sit out the bidding on that term, at least. He said that even assuming that 10 percent of the people who clicked on that link would actually buy something - an optimistic assumption - "You're paying $30 for a sale, which isn't very cost effective."